Perky pound liking the latest UK inflation data

Author: Mike Paterson | Category: News

Stronger than expected data sees the pound rally well 12 Spet

GBPUSD now with second wave buying posting 1.3274 highs not seen since Sept 2016 and just ahead of the larger 80-00 sell interest I noted earlier. EURGBP down to 0.9013 ahead of decent support/demand at 0.9000

Better/stronger data but the BOE expected it and also expected it to peak into end-2017 so is there really anything more to glean from this for them to panic into rate hikes?

Yes they want some wiggle room as do the Fed and ideally would like a couple of hikes to allow for some room when the proverbial next hits the fan. Markets seems to be pricing in a March 2018 hike atm

Raising rates though will impact negatively on households and that remains a concern too.Tomorrow's latest wages report at 08.30 GMT as ever crucial and will help give us a better picture.

Currently though the pound is seemingly the best of a bad/average bunch ( EURGBP reversal lower definitely a driver along with yen selling/GBPJPY buying) and the algos/lemmings don't care two hoots for rationale so we might see the demand remain for a while.

Bears/rally sellers might need to be patient but, without being myopic, this data changes nothing IMHO. I'll stay with these 1.3245 shorts ( now added above 1.3270) for a while and see what happens. Had a good crack on it heading down to 1.3150 from 1.3220 yesterday so more than a free bet for the moment.

As ever though , ours is not to reason why ours is just to sell and buy. Go with the flow. The trend is your friend. Blah blah. Rationale rarely rears its head in forex.